What’s in a Name? Trademarks, the Metaverse, and Rogers in the 21st Century

What happens when the world of high fashion enters the digital realm of the metaverse? Or when the traditional tenets of trademark protection threaten to collide with freedoms of artistic expression? And just what are the limitations on that artistic expression when that expression is designed to serve a greater underlying commercial purpose? The Southern District of New York is currently grappling with these questions in the ongoing case Hermès International v. Mason Rothschild, where the defendant artist and entrepreneur created and sold a series of non-fungible tokens (NFTs) based on Hermès’ famous – and famously expensive – Birkin bags. These NFTs, titled “MetaBirkins,” were sold and re-sold for prices that rival those of the real-world bags. Hermès filed suit against Rothschild, alleging trademark infringement of the Birkin mark under the Lanham Act, among other allegations.

On May 18, 2022, the Southern District denied Rothschild’s motion to dismiss Hermes’ trademark claims but, in doing so, made a critical ruling on the applicability of trademark rights in the NFT space.

Hold On, What the Heck is a “MetaBirkin”?

MetaBirkins are a series of 100 NFTs created by Los Angeles-based artist Mason Rothschild. An NFT is a digital asset with a unique identity that can be transferred between owners, with records of that ownership maintained on a distributed ledger such as a blockchain. It’s sort of like a digital receipt that can be transferred between owners, and ownership of that receipt grants certain privileges. In some cases, these privileges may include exploitation rights to a copyright-protected work associated with the NFT, but other privileges may be granted, both hypothetical and realized.

In this case, the digital assets associated with the NFTs are visual recreations of the famous Hermès Birkin bags, depicted wrapped in fur and with various colors and designs but made and distributed without association or affiliation with Hermès. Currently, the NFTs have no utility beyond their connection with the fuzzy bag art. However, as with much else in the metaverse, future uses for these NFTs remain the subject of eager speculation. While the individual MetaBirkins sold initially for roughly $450 each, a mere two weeks later, the price tag inflated to over a hundred times that starting price. The eye-popping price for the NFTs has also generated a market of copycats and counterfeit MetaBirkins, projects associated with neither Rothschild nor Hermès that seek to mimic the success of Rothschild’s NFT project.

The Rogers Test

Hermès has alleged, among other claims, trademark infringement for Rothschild’s use of the name “MetaBirkins” as the title of the NFT project. Trademarked content may, in some circumstances, be used in an artistic work when that use meets both prongs of the Rogers test. Established in the 1989 Second Circuit decision Rogers v. Grimaldi, where famed vaudeville artist Ginger Rogers filed suit against the producer and distributor of Federico Fellini’s Ginger and Fred over the use and reference of her name in the film about two fictional vaudevillians, the Rogers test permits the use of trademarked content in a defendant’s artistic work if the use (1) has some artistic relevance to the underlying work and (2) is not explicitly misleading as to the source or origin of that work.

The first prong of the Rogers test is an extremely low bar, only failing when the title “has no artistic relevance to the underlying work whatsoever” -- courts generally loathe to be arbiters of what is or is not artistically relevant, so the Rogers test rarely fails on the first prong. The second prong is far more fact-intensive, usually requiring the application of the numerous factors outlined in another case, Polaroid Corp. v. Polarad Electronics Corp. (which include, among others, the strength of the senior mark, evidence of actual confusion, and the junior user’s bad faith in adopting the mark), to determine whether a use is explicitly confusing.

Applied to MetaBirkins

The court acknowledged Hermès’ argument that Rothschild was attempting to use the Birkin mark as a source identifier on social media to promote and advertise the MetaBirkins NFT line, but also that using a protected mark in social media to advertise a piece of art is not always distinguishable from the underlying use of that protected mark in the title of the artistic work. Nor does selling the art render the Rogers test inapplicable, as in the original case, the film Ginger and Fred was widely commercialized.

While the court ultimately agreed with Rothschild that the Rogers test is the appropriate one, the court was unwilling to grant Rothschild’s motion to dismiss based on Rogers because it could not make factual determinations on either prong of the test.

Hermès raised sufficient allegations that Rothschild did not intend for the name “MetaBirkins” to have any artistic association with the NFTs but rather intended the NFTs purely as “a tribute to Herm[è]s’ most famous handbag, the Birkin.” To support these allegations, Hermès pointed to Rothschild’s statements that he “wanted to see as an experiment if [he] could create that same kind of illusion that [the Birkin bag] has in real life as a digital commodity.” The court declined to resolve whether “MetaBirkins” cleared the low bar of artistic relevance at this stage.

To the second prong, Hermès also argued that in applying the Polaroid factors, the use of the “MetaBirkins” title was explicitly misleading. In addition to the well-established strength of the Birkin mark, Hermès presented evidence that consumers and the media had been confused about whether Birkin was associated MetaBirkins project; Hermès argued that Rothschild adopted the Birkin mark in bad faith when he described the project as a “tribute” to Hermès’ famous handbag and that the line between the actual bag and his NFTs was “getting a little bit blurred” because of Birkin’s interest in the metaverse. The court determined that these were sufficient factual allegations regarding the second prong of the Rogers test to survive Rothschild’s motion to dismiss.

What’s Next?

While the court has decided the test for determining whether MetaBirkins infringes Hermès’ trademarks have been established, the result of that test is far from certain. Assuming the litigation continues without the parties settling, it will be left to the fact-finder to determine whether the prongs of the Rogers test are genuinely in dispute and met.

But beyond that question, the case of the MetaBirkins raises numerous issues about the future of fashion, art, and commerce within digital spaces. We are already seeing numerous brands like Nike dipping their toes into the metaverse with their own NFT lines, and high fashion is likely not far behind. Future conflicts between traditional artistic expression and trademark protection in a new digital frontier are inevitable, but less certain is the extent current trademark registrations will provide adequate protection in this new web3 future.  

Forward-thinking brands considering engaging with the metaverse should look closely at their trademark portfolios to determine whether their existing registrations cover any anticipated digital expansions. If there are gaps in desired coverage, those brands should consider seeking new applications for their portfolios to encompass these possibilities sooner rather than later. Doing so will provide a stronger argument for the trademark holder if an unauthorized third-party attempt to make digital assets based on their marks. Meanwhile, artists who want to use third-party brands in NFTs or digital art should avoid misleading the public as to the source of their goods, such as through prominent disclaimers at the point of sale. 

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Tyz Law Group is a boutique litigation and IP counseling firm comprised of former big law and in-house attorneys with highly specialized expertise in the technology sector.  If you have any questions about the issues discussed in this article, please do not hesitate to contact us at (415) 868-6900 or contact@tyzlaw.com.

 

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